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The natural hormone 17 beta-estradiol (E2) induces tumors in various organs of rats, mice, and hamsters. In humans, slightly elevated circulating estrogen levels caused either by increased endogenous hormone production or by therapeutic doses of estrogen medications increase breast or uterine cancer risk. Several epigenetic mechanisms of tumor induction by this hormone have been proposed based on its lack of mutagenic activity in bacterial and mammalian cell test systems. More recent evidence supports a dual role of estrogen in carcinogenesis as a hormone stimulating cell proliferation and as a procarcinogen inducing genetic damage. Tumors may be initiated by metabolic conversion of E2 to 4-hydroxyestradiol catalyzed by a specific 4-hydroxylase (CYP1B1) and by further activation of this catechol to reactive semiquinone/quinone intermediates. Several types of direct and indirect free radical-mediated DNA damage are induced by E2, 4-hydroxyestradiol, or its corresponding quinone in cell-free systems, in cells in culture, and/or in vivo. E2 also induces various chromosomal and genetic lesions including aneuploidy, chromosomal aberrations, gene amplification, and microsatellite instability in cells in culture and/or in vivo and gene mutations in several cell test systems. These data suggest that E2 is a weak carcinogen and weak mutagen capable of inducing genetic lesions with low frequency. Tumors may develop by hormone receptor-mediated proliferation of such damaged cells.